CarMax Financing: A good deal?

Before customers walk into a CarMax dealership, they may wonder about their financing options. As the Federal Trade Commission points out, with the average price of a new car equaling approximately $28,000 and the price of a used vehicle equaling $15,000, most people need financing to purchase a car. They offer customers quotes from multiple lenders and then, if customers accept the offer, they still have three days to find a superior offer and to refinance.

The CarMax experience begins with a search of available inventory. Customers can either ask about a car that they saw online or provide their salesperson with criteria. If the salesperson finds a car fitting the customer’s criteria on the lot, then the financing process begins. Otherwise, the salesperson will offer the customer the opportunity to bring a car over from another lot. The price for transporting the car from the other lot is non-refundable, even if the customer chooses not to purchase the car. However, the customer has the opportunity to ask unlimited questions of an on-location salesperson about the condition of the car to be transported.

At a CarMax dealership, salespeople enter the customer’s credit application into the computer system. The application is sent through a series of prime and then subprime lenders, depending on the creditworthiness of the applicant. The offers then come through to the manager, and customers have the opportunity to view the approvals on the salesperson’s computer screen. Customers may take the financing from one of the CarMax lenders, but they also have three days to refinance with another lender if the other lender can beat the CarMax rate.

In addition to financing with CarMax Auto Finance, customers have the opportunity to view offers from multiple lenders. On the CarMax Auto Finance website, CarMax lists each individual lender and provides a general overview of their history and services. Since customers view multiple offers, they have the flexibility to choose the best loan for their needs based on available options. Lenders include CapitalOne, Wells Fargo Dealer Services and Santander.

People have a vast array of opinions regarding the CarMax experience as a whole. CarMax’s hallmark is its “no-haggle” policy regarding car price. The ticket price is the price that customers will pay, and negotiations will not be accepted. The lack of room for negotiation bothers some consumers, particularly experienced car customers who are comfortable with negotiations and who have the experience to spot opportunities. However, some consumers enjoy not having the pressure of negotiating prices with a salesperson, particularly if they dread the negotiation process.

CarMax also has a thorough appraisal process for trade-ins. Instead of receiving a ballpark dealer figure on a post-it note, customers will get a detailed form detailing why the dealership appraised the car at a particular price. Of course, not every consumer receives the quote that they feel is appropriate for their trade-in, and again, the company’s “no-haggle” policy applies. However, if consumers take the time to check their used car’s value with the Kelley Blue Book or with Consumer Reports, then they will enter the CarMax dealership armed with the information that they need to understand whether or not they received a fair trade-in offer.

Consumers should go into the CarMax experience in the same way that they should go into any car buying experience. The more information that consumers have, the more likely they are to get the best deal on a vehicle. In the past, CarMax has received the Better Business Bureau’s Torch Award for Marketplace Excellence. The company received the reward for “commitment to exceptional standards that benefit customers.” Customers who seem displeased with CarMax usually accepted a price that they later came to regret because they had not done their research before going to the dealership.

Before committing to any financing offer, customers should shop around. Looking at available offers from CarMax as well as consulting a bank or credit union will give customers an idea of what type of interest rate to expect based on their credit score. For many consumers, the CarMax financing experience proves to be a straightforward and trustworthy process.